I have researched all or most store chains in the world in order to find the most solid and technologically advanced chains competing successfully. I have further researched what these particular chains are doing and what they can do or implement in order to become even better. When studying the most important aspects of a stores profits be it a chain or a single store some aspects become more important than others. These aspects arise through competitive advantages, technical and other innovations or a locationally superior place or area of the store/s. The competition is always hardest within the store formats. (Agrifood Economics commissioned by the centre for competition in Sweden.) I.e. small stores compete harder with each other than a small and a bigger store. Therefore it pays to differentiate and innovate within the formats to achieve advantages. As can be done with the internet tool in question here. Price advantages are hard to uphold in the long run especially within the same format. (Agrifood Economics commissioned by the centre for competition in Sweden.) Which means it is very hard to achieve added sales and more return through price competition within the same format. Added sales and return should be sought in other ways. Such a way can be accomplished via the internet tool presented in this paper. “To Keep Your Customers, Keep It Simple” (by Patrick Spenner and Karen Freeman, Harvard Business Review.) The single biggest driver of stickiness, by far, was “decision simplicity”—the ease with which consumers can gather trustworthy information about a product and confidently and efficiently weigh their purchase options. What consumers want from marketers is, simply, simplicity.” Our study found that the best tool for measuring consumer-engagement efforts is the “decision simplicity index,” a gauge of how easy it is for consumers to gather and understand (or navigate) information about a brand, how much they can trust the information they find, and how readily they can weigh their options. The tool provides this as simply as possibly in sections of comparable products. 70% of all brand choices happen in the store, 68% of all purchases are unplanned and 5% of customers are loyal to 1 brand. (Procter & Gamble) Directed sales efforts with the tool are thus value adding. Any of these four elements—the offering or its funding mechanism, the employee management system or the customer management system—can be the undoing of a service business. (Frances X. Frei, associate professor of business administration in the Technology and Operations Management unit at Harvard Business School in Boston.) Managers should discover the relative importance customers place on attributes and then match the investment in excellence with those priorities. At Wal-Mart, for example, ambience and sales help are least valued by its customers, low prices and wide selection are most valued, and several other attributes rank at points in between. (“Wal-Mart's Value Proposition” in David J. Collis and Michael G. Rukstad's article “Can You Say What Your Strategy Is?”) The application tool gives both a personalized service and provides ideas inexpensively with or without ambience and as part of the wide or any other type of selection. Thus providing a tailor made solution for most stores.
“Roland Berger 2009 Convenience, Price and Diversity” are the 3 most important factors when a customer chooses a store “Convenience can be seen as depending on total time spent in shopping and on the value of the time spent (Roland Berger 2009)” (Supporting the process improvement outcome here). And Accenture's 2014 study on 15.000 buying customers in 20 countries.“40 percent of respondents ranked improving the in-store customer experience as first, compared to just 16 percent who said the same of online shopping. (Supporting the process improvement outcome here)” www.accenture.com/us-en/Pages/insight-accenture-seamless-retail-survey-2014.aspx
In Financial Times Jul. 7, 2014 there was an article on what big supermarket chains in the world are starting to do right now. Supermarkets are investing in efficiency, shrinking and increasing the convenience of their stores. This is true especially among discounters. Wal-Mart, Tesco, Aldi, Lidl, Morrison's, Sainsbury's, Carrefour etc. are all planning changes or additions. It has become evident that customers look for convenience not only the cheapest price as has been the thought earlier.
The process at issue here leads to efficiency, worker wellbeing, increased convenience, more service and more return or more pricing power in the most ecological way. The process is thus also in line with what the customer wants leading to possibly lower prices through process improvements, a more motivated workforce and more efficiency.
Jul. 6, 2014 Retail
Wheels coming off the supermarket trolley
Shift to discounters and small stores leads to refocusing
www.ft.com/cms/s/0/0a7150ea-fe1f-11e3-b4f1-00144feab7de.html
Jul. 6, 2014 Retail
Supermarkets downsize for convenience
Race for space adapts to changing shopping habits
www.ft.com/cms/s/0/0f9ad0bc-01ff-11e4-9af7-00144feab7de.html
When comparing to online sales alternatives a physical store offers many goods on display and the customer can feel, smell and see the real products before making a purchase decision. This fact and advertisement related to ideas for the senses and spur of the moment purchases differentiate the physical store from an online alternative.
Once the customer has chosen to come to the store one can provide ideas to the customer in order to increase sales. Price is important and price can be used to interest the customer to purchase an item. Within the tool added product ideas, recipes and the like are offered to the customer. The customer arrives at a shelf to buy a certain item. This same item is offered on the screen with e.g. 1-3 other items that form an idea or recipe for the main item. If the customer chooses to buy the idea more sales are created. The tool is also convenient in directing offers to reduce food spill in stores, which constitutes about 5% of all food, as expiration dates draw closer. Americans wasted fresh vegetables worth of 27.1 billion U.S. dollars. In total, food worth of about 180 billion U.S. dollars was wasted by households, supermarkets, restaurants and other food service providers in the United States in 2012.
http://www2.jordbruksverket.se/webdav/files/SJV/trycksaker/Pdf_rapporter/ra11_20.pdf
http://www.statista.com/statistics/239814/food-retail-losses-in-the-us/
http://www.statista.com/statistics/262075/amount-of-wasted-food-in-the-us-by-food-category/
Further it is a cheap way to increase sales in many places of the store. This can conveniently be done with a sustained price image as the tools focus is to sell more products e.g. alongside of a main product already chosen by the customer. If 10% of a stores customers buy one item more it creates a considerable sales and profit increase.
The customers see this as a convenient added service which content is easily and quickly controlled centrally by the store. It is also suitable for both upmarket as well as discount stores. The tool and its input relies conveniently on the stores staff expertise and therefore has an advantageous cost structure as well as creates a better working atmosphere. As such it is suitable in both normal stores and stores using self-scanning equipment.
The returns can grow quite large. In a store with 7 screens that manages to sell 50 normal additional small products per screen per day for 5 days a week during a year increases its yearly return by $335.000,—(based on prior research.). Implementing the tool in a small store with approximately 2.100 daily customers, a real example. The store is situated near a shopping mall and is a smaller store, the smallest at the location. One of its advantages previously was longer opening hours governed by legislation. This advantage was removed at the turn of the year and opening hours were set free for all stores. This meant that large supermarkets and all other stores around this store now are open during the same hours. Competition at this location is thus within the segment and outside of it. The store is not a discounter and has higher or normal prices. One can say that prices are among the highest by comparison. When one considers this the tool is faring very well. After starting off at +220$ more return a week and quickly rising to +550$ a week that turned to +880$ a week in a couple of months time, for displayed products with 4-5 screens. A little Later this figure punched through +1100$ added return per week. To give you a picture of the landscape the store is surrounded by supermarkets in all directions within a 200 m radius. Two very large supermarkets with low prices and high quality products for all occasions. One Lidl (discounter) with by far the lowest prices of them all, which has brought the Lidl chain around 15% market share of the whole market in recent years. A smaller supermarket similar to the larger ones but in another direction with many similar product groups as the smaller store but cheaper. And lastly a semi discount chain local store slightly larger than the smaller store. The competition is rock hard I would say. This is exacerbated by the negative GDP of Finland and downturn like conditions presently. The stores customers have been influenced in a positive way by the tool and displayed products are experiencing increased sales and return thanks to the displays. The service has been delivered by giving daily ideas to the customers using the tool not relying on price rebates. The average weekly return increase has been 890$, the average weekly return increase compared to the reference week before the tool is 630%, the average weekly return increase compared to the reference week average before the tool is 372% and the average weekly return increase compared to the previous week is 108%. The period in question is March-September. That underlines the function of the product and proves that one can indeed increase return like this in a positive way as described here. The store lost customers after the opening hours were set free as people could buy the same things more cheaply and choose from a greater variety from other nearby stores. Thus the strategy and tool counteracts this fact. The achievable returns rely on total customer numbers and usage of the tool. However, the numbers have been achieved from scratch and with no previous experience. It is important to know the customer and what they may like. Something that the store staff does.
For the result to be as good as possible the input in the tool is important relying on ideas, recipes, knowing the store and knowing the customer. This puts the store manager and the staff in focus. It provides a great opportunity to extract some added positive effects from the tool.
The most important things in a successful organization are tackled or included in the tool concept. An organization directed towards, cooperation acceptance and renewal strengthens employees' self-image and may release some hidden resources and talents. An energizing and cooperating atmosphere among employees drives everybody forward. The biggest benefits are achieved when employees feel and see that they can contribute to achieving the organizational goals. As the staff is involved in the tools input the above is realized.
An environment like the one described is the most important resource affecting competitiveness, result and image. A rule of thumb is that one Euro invested in the working atmosphere pays itself back 6 fold. Measured in profits it has been shown that the difference between the highest and lowest quartile of businesses that have achieved a work atmosphere like the one described above is around 1 million Euros per department and per year. (Source Finnish Institute of Occupational Health. Guy Ahonen, http://www.ttl.fi/en/organization_management/Pages/default.aspx)